As Washington begins playing its pressure cards, we ask how far it will go in dealing with the ongoing crisis in Egypt.

On Friday, two days after a massive security crackdown killed hundreds of people, Egypt braced for more confrontation as protesters marched in several cities and held a 'day of rage' following Friday prayers.

And in a move that may lay the ground for more bloodshed, the Interior Ministry authorised the use of live ammunition against anyone who attacks government buildings.

The lack of strong message before the coup happened almost signaled that it will be tolerated and after the coup the statements were quite weak ... and the army thought that it had the green light to carry on and do state of emergency. And the army as an establishment has been ruling Egypt for 60 years and these are measures they can do in their sleep ...

Nadim Shehadi, Chatham House

They also promised to stop any protesters trying to hold sit-ins.

However, on Thursday, US President Obama broke his silence and condemned the violence in Egypt.

"Let me say that the Egyptian people deserve better than what we have seen over the last several days. And to the Egyptian people let me say the cycle of violence and escalation needs to stop," said Obama.

"We call on the Egyptian authorities to respect the universal rights of the people. We call on those who are protesting to do so peacefully and condemn the attacks we have seen by protesters including on churches.

"We believe that the state of emergency should be lifted and the process of national reconciliation should begin and all parties need to have a voice in Egypt's future, that the rights of women and religious minorities should be respected, and the commitments must be kept to pursue transparent reforms to constitution and democratic elections of a parliament and a president."

His statement prompted an angry response from the country's interim government which said Obama does not understand the facts.

Despite the sharp criticism, President Obama stopped short of using what is considered his strongest leverage against Egypt - US military aid.

The US gives Egypt $1.3bn of military aid every year and the White House has gone to great lengths to make sure it's protected.

US law calls for foreign aid to be suspended following a coup. But Obama has avoided using the word - instead describing Mohamed Morsi's departure from power as a 'military intervention'.

Military aid forms a big part of relations between the two countries.

Those relations are set by a 1979 peace agreement between Egypt and Israel - which the US sees as an anchor of stability in the region.

And Egypt has also played a central role in helping the US battle al-Qaeda and other armed groups.

So, has President Obama gone far enough at this point at least in dealing with the ongoing crisis in Egypt or should he be doing more? And will the US penalise the Egyptian military at all?

To discuss this, Inside Story, with presenter Hazem Sika, is joined by guests: P J Crowley, from the Institute for Public Diplomacy and Global Communication, George Washington University and a former assistant secretary of state and also a former state department spokesperson; Salma Mousa, a researcher at the Arab Center for Research and Policy Studies, Doha; and Nadim Shehadi, an associate fellow of the Middle East and North Africa Programme, Chatham House.

"I think we are dealing with decisions made in Egypt and the mistakes that are being made in Egypt. United States is an influential country, it does have the ear of the generals who are the de-facto leaders of the country right now, but obviously whatever the United States is giving, it doesn't appear that the generals are following it.

"Obviously the president [Obama] gave a strong message yesterday ... and the United States has established relationships with the Egyptian military. That said there are other countries in the region that are already also contributing far more significant sums to move Egypt in a perhaps slightly different direction. So United States' influence is there but it is not necessarily decisive."